The “too big to fail” problem

I’m so glad a real writer is thinking about this stuff.

Earlier today Techdirt ran an article by Mike Masnick titled, “Why Aren’t We Trying To Solve The Too Big To Fail Problem?”

He’s absolutely right in bringing this to the table. Maybe there’s no solution – but we need to do our best to consider this issue.

He’s articulated so well something that’s needed to be stated for so long. It’s not a new issue. It’s been going on at least since the seventies – I’m thinking of Lockheed. It’s why we have Amtrak. In the eighties it was the S&L thrifts.

In the case of Lockheed, the “too big” was in the sense of national security. The aerospace giant produced too much secret weaponry to become vulnerable to foreign control.

With the railroads, “too big” meant to integral to the national transportation infrastructure – and again the national security aspect reared its head. Additionally in the case of the railroads, and probably most significantly, too many paychecks came from the same bank account.

Perhaps businesses ought to be forced to split when they reach a certain size? Like cellular division? I’ve long harbored the belief that when single organizations reach a certain size, despite the “economies of scale” that develop, certain bureaucratic inefficiencies develop diminishing returns at a certain scale.

Under specific circumstances the scope of an organization might become more of a hindrance than a boon to the organization. In nature, organisms almost always arrive at an equilibrium with their environments (ecosystem). Both in terms of the size of their populations and the physical dimensions of the species themselves, organisms generally don’t exceed the capacity of their environment’s ability to sustain them.